Correlation Between PPHE HOTEL and Carsales
Can any of the company-specific risk be diversified away by investing in both PPHE HOTEL and Carsales at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining PPHE HOTEL and Carsales into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPHE HOTEL GROUP and CarsalesCom, you can compare the effects of market volatilities on PPHE HOTEL and Carsales and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in PPHE HOTEL with a short position of Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPHE HOTEL and Carsales.
Diversification Opportunities for PPHE HOTEL and Carsales
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PPHE and Carsales is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding PPHE HOTEL GROUP and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom and PPHE HOTEL is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on PPHE HOTEL GROUP are associated (or correlated) with Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom has no effect on the direction of PPHE HOTEL i.e., PPHE HOTEL and Carsales go up and down completely randomly.
Pair Corralation between PPHE HOTEL and Carsales
Assuming the 90 days trading horizon PPHE HOTEL GROUP is expected to under-perform the Carsales. But the stock apears to be less risky and, when comparing its historical volatility, PPHE HOTEL GROUP is 1.12 times less risky than Carsales. The stock trades about -0.01 of its potential returns per unit of risk. The CarsalesCom is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,965 in CarsalesCom on October 12, 2024 and sell it today you would earn a total of 335.00 from holding CarsalesCom or generate 17.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PPHE HOTEL GROUP vs. CarsalesCom
Performance |
| Timeline |
| PPHE HOTEL GROUP |
| CarsalesCom |
PPHE HOTEL and Carsales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPHE HOTEL and Carsales
The main advantage of trading using opposite PPHE HOTEL and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPHE HOTEL position performs unexpectedly, Carsales can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Carsales will offset losses from the drop in Carsales' long position.| PPHE HOTEL vs. T MOBILE US | PPHE HOTEL vs. Cogent Communications Holdings | PPHE HOTEL vs. MOBILE FACTORY INC | PPHE HOTEL vs. Air Transport Services |
| Carsales vs. MHP Hotel AG | Carsales vs. Meli Hotels International | Carsales vs. MELIA HOTELS | Carsales vs. Pebblebrook Hotel Trust |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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